The EU Commission issues its comments on the future of EU VAT

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On 5 December 2011, the EU Commission published the results of the public consultation on its Green Paper on the future of VAT, launched in 2010. The Commission reported that it received more than 1,700 responses to the Green Paper from businesses, academics, citizens, tax authorities and professional service providers, including EY; the size of the response indicates just how profoundly today’s economy is affected by VAT issues.

Following this consultation, the Commission has now presented its conclusions on how the EU VAT system should evolve in the coming years and outlined its planned next steps. The short-term proposals include a move to taxing transactions using the "destination principle" in the country of consumption, a simplification of the rules and a broadening of the tax base to boost revenues. These proposals will have an impact on all businesses that are established in, or trade with, the EU.

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